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At a Glance...
Top Stories
Automakers Assemble Make-or-Break Case
A Face of the Fallout
UAW Mulls Reopening Contracts to Aid Big 3
Automakers Have 5 Critical Issues to Address to Get Bailout
Dealers Offering Bargains On Cars
Big Three May Need to Trim Car Brands
Auto Firms' Woes Test Customer Loyalty
Ford Will Speed Green-Car Launches
Opinion: Pretend it's December 2009
NADA Update
NADA to Host Virtual Seminar on Changes to Telemarketing Rules
STAR Answers Dealers' Questions About Hardware Based Systems
Top Stories
Automakers Assemble Make-or-Break Case

Executives Return to Congress to Plea for $25 Billion in Loans
In its second attempt to persuade Congress to grant the U.S. auto industry $25 billion in emergency loans, Chrysler plans to make the case that automakers can cut their costs and point to the future by forging an alliance to share fuel-efficient vehicle technologies. Ford will tell lawmakers that it intends to retool plants for smaller, more fuel-efficient cars as a part of its goal of becoming the fuel-efficiency leader in every vehicle category. General Motors will address its $43.3 billion debt burden and an upcoming multibillion-dollar payment to a union-run trust that will cover employee health-care costs. Detroit's Big Three automakers are all scrambling to reassure Congress that any money they receive will not be squandered. An appearance two weeks ago by the chief executives failed to secure the loans. Lawmakers sent them away with orders to return with detailed business plans. Those plans are due to be delivered today.
Source:  Washington Post

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A Face of the Fallout

Montana Ford dealer faces same dilemma as Detroit 3: She needs money now
Through October, about 700 automobile dealers in the United States have gone out of business this year. Ford dealer Donna Todd is desperately hoping she won't be next. Todd is fighting to keep her and her late husband's dream alive by moving her small Montana dealership, Stetson Ford, into a newly built store about a mile from the current building. But with finance problems plaguing her, Todd says she fears that "I don't have enough fingers to plug all the holes in the dike. I've run out of fingers and toes." Todd's problems started earlier this year, when Ford Motor Credit Co. yanked her floorplan financing. Then her plans to build a new store were halted when financing dried up. Now, no banks want to lend to her because she is in the auto sector, she says. So now, on a small scale, Todd faces what the Detroit 3 are struggling with on a large scale: the need for money fast ... or else. Her problems are not uncommon. The acceleration of dealers leaving the industry is one reason that NADA has escalated its push for dealers to use its free and confidential Lifeline hotline. The hotline provides professional counselors to help dealers avoid pitfalls or resolve problems before it's too late, says [NADA Chairman Annette] Sykora. She offers one important piece of advice to dealers: "Protect your credit rating so you have good credit. Any solutions would require good credit." And she encourages dealers to not give up.
Source:  Automotive News (Subscription required.)

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UAW Mulls Reopening Contracts to Aid Big 3

Union summons leaders to Detroit as firms give survival plans to Congress today
WASHINGTON -- As Detroit's Big Three are poised to present their business plans to Congress today justifying quick approval of $25 billion in emergency loans, the United Auto Workers has called an emergency meeting in Detroit on Wednesday during which the union could consider reopening its 2007 contracts with the automakers. One local UAW official who has been invited to the meeting expects the union leaders are going to be asked for their support to reopen the 2007 contracts and to agree to concessions that would help make the automakers financially viable. The business plans GM, Ford and Chrysler have prepared for Congress include seeking additional givebacks from the UAW as one way to cut costs, according to sources with knowledge of the plans. A person familiar with one automaker's plan said a variety of topics are being explored. Key issues include reopening the contract, eliminating the controversial jobs bank that still pays workers even when they are laid off, and how much and how quickly the automakers will contribute to a trust fund to be run by the UAW that will take over responsibility for retiree health care beginning in 2010. The health care trust was a key part of the landmark contracts negotiated last year.
Source:  The Detroit News

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Automakers Have 5 Critical Issues to Address to Get Bailout

DETROIT — Here are five crucial issues experts say automakers must meet head-on in their plans if they are to win the PR war and get politicians and taxpayers to back loans to save the industry:

  1. Overpaid workers
  2. Overpaid executives
  3. Green cars
  4. Too many dealers.  In their plans, the Detroit 3 could make their case for cutting dealers and even ask Congress to override state laws to cut consolidation costs. However, Van Conway, a restructuring expert in Detroit, says it still would take too long and sees little alternative to buying dealers out: "I don't see any easy way to do that, except for compensating them to go out of business." Meanwhile, others are even urging federal help to keep more dealers in business. Raul Vasquez, an advertising consultant in Florida, is mounting a grass-roots campaign for federal backing of "floor-plan" loans — dealers' financing for the cars and trucks on their lots. "We're trying to get Congress to pay some attention to the dealer level," says Vasquez, who runs SaveMyLocalDealer.org. "They're trying to solve the problem in the auto industry on the manufacturing level, but that's not what consumers are scared about. They're scared when they see their local dealers shut down."
  5. Bias in Congress
    Source:  USA TODAY

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Dealers Offering Bargains On Cars

Serious Slump Spurs Discounts
Looking for an upside to the downturn? Check out the auto showrooms. If you qualify for a car loan (credit score above 500 and proof of employment), deals can be had. Thank the recession, the meltdown of Detroit's Big Three and the downward spiral in consumer confidence. "It all comes down to how much you finance," said Ethan Rossignol, general sales manager at Darcars Toyota Silver Spring. For those borrowing money, a credit score over 700 will probably bring an interest rate in the 5 or 6 percent range, said Al Toueg, general sales manager at Buick Pontiac GMC on Nicholson Lane in Rockville, part of the Fitzgerald Automalls network. The lower your credit score, the higher the interest rate. A credit score of around 600 might cost the buyer an annual interest rate of 8 or 9 percent. With car sales expected to hit 13 million this year compared with 16 million last year, dealers have thrown out the book on showroom economics. Profit margins, which is the amount they keep on each car, are thin or almost nonexistent.
Source:  Washington Post

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Big Three May Need to Trim Car Brands

DETROIT — For the Big Three automakers to win over Washington lawmakers in their bid for federal aid, they will have to address a critical question in the business plans they give to Congress on Tuesday. Just how serious are they about shrinking their vast lineups of different brands and models to match the current harsh reality of the market? Between them, General Motors, Ford Motor and Chrysler sell 112 different car and truck models through 15 brands in the United States. By contrast, the top three Japanese automakers — Toyota, Honda and Nissan — have roughly half as many choices with 58 models combined sold through seven brands. A wide range of offerings was historically a source of strength for the American companies when they dominated the vehicle market — a strategy of providing a car for “every purse and purpose” as Alfred P. Sloan, G.M.’s leader in the 1920s and 1930s, once said. But the Big Three now sell fewer than half of all new vehicles in this country, with a market share of about 47 percent this year, compared to 62 percent just five years ago.
Source:  The New York Times

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Auto Firms' Woes Test Customer Loyalty

New York -- Don Wissel's love affair with General Motors cars started in 1960, when he bought a silver-gray Pontiac Catalina, a roomy car with modified tail fins and enough horsepower to gobble up miles on the Garden State Parkway. Since then, he's owned almost everything GM's made – Chevys, Buicks, Olds, Caddys, and now he parks a Yukon and a Denali in his driveway in Rumson, N.J. Mr. Wissel qualifies as a "loyal" General Motors customer – a group the automaker will need to hold onto now more than ever if it is to survive and prosper in these hard times. The specter of bankruptcy, though, may impair GM's ability to retain even these loyalists – one reason that the firm's CEO, along with the top executives of the other US automakers, returns to Washington this week to make the case for some sort of federal bailout. Their key argument to get $25 billion: They have a business plan to remain viable. For any auto company business plan, repeat customers are essential... But if an automobile company were to declare bankruptcy, even the most loyal customer base would probably dissipate – one reason Detroit executives appear so disinclined to go that route, say analysts. Automobile dealers have little doubt that a bankruptcy would create enormous problems for them, because buying an automobile is a "big ticket" item that a customer pays for over many years. With a bankruptcy, there is a huge risk for even the loyal customer, says Annette Sykora, chairman of the National Automobile Dealers Association in McLean, Va. "You establish that relationship, you have to continue that relationship," says Ms. Sykora, who owns Ford and Chrysler dealerships outside of Lubbock, Texas. "If the customer is abandoned and actions force the dealer out of business, it's difficult to reestablish that relationship" even if the automaker eventually returns to viability. Successful dealers know how to enhance those relationships. Skyora cites a family who has been buying cars from her family's dealership for 70 years. "I remember when the great-grandfather drove through some water and, after we worked on repairing the car, we filled up the vehicle with little kiddie life rafts. "He got a huge kick out of it," she recalls, "and even when his grandsons come in, they still think it's hilarious."
Source:  The Christian Science Monitor

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Ford Will Speed Green-Car Launches

CEOs of Ford, GM Will Accept $1 Salaries in U.S. Bailout; UAW Leaders to Meet to Discuss Labor Pacts
Ford Motor Co. Chief Executive Alan Mulally plans to tell Congress he is accelerating his company's development of hybrid and electric vehicles and is willing to cut his salary to $1 a year if Ford uses any federal funds. General Motors Corp. is expected to focus on efforts to lighten the company's heavy debt load and consolidate or sell at least one of its eight automotive brands, most likely Saab, people familiar with the matter said. GM CEO Rick Wagoner also will take a $1 salary, those people said. Chrysler LLC is likely to emphasize its need for cash to stabilize the company and eventually join an alliance with one or more foreign auto makers, a person close to Chrysler said. In another symbolic move, Mr. Mulally plans to drive a Ford Escape hybrid to Washington, where he and his GM and Chrysler counterparts are set to appear later this week. The Detroit CEOs are expected to appear Thursday before the Senate Banking Committee and Friday before the House Financial Services Committee. If Democratic leaders decide to move forward with assistance, Congress would be called back to Washington.
Source:  The Wall Street Journal (Subscription required.)

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Opinion: Pretend it's December 2009
by Keith Crain

It's a year from now. Back in 2008, Congress decided to let the auto companies fend for themselves. General Motors filed for Chapter 11 in early 2009. Floor traffic stopped in showrooms. GM factories shut down, and soon suppliers started to shut down as well. Six weeks later, Ford Motor Co. had to suspend operations because many of its major suppliers had gone dark. Chrysler LLC suspended operations at about the same time. Nearly 10,000 car dealers ran out of new-car inventory. Some became used-car dealers and continued to service their old franchises until the parts ran out. Thousands of dealership employees were let go. Toyota, Honda and Nissan shut down North American manufacturing. Six months later, they were able to replace bankrupt suppliers in the United States with Japanese suppliers. They got their production back up to speed, with much higher import content. Almost a year after General Motors declared Chapter 11, millions of workers are unemployed, hundreds of suppliers have disappeared, and 6,000 dealerships have shuttered their doors. The United States is in a major depression. Now tell me once again why Congress doesn't want to give the domestic auto industry financial assistance.
Source:  Automotive News (Subscription required.)

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NADA Update
NADA to Host Virtual Seminar on Changes to Telemarketing Rules

Many new and amended federal telemarketing regulations have been issued since the National Do-Not-Call Rules were established in 2003, and dealers who haven’t kept up risk the possibility of very costly litigation. While not all of these mandates have received widespread press coverage, they deserve dealers’ utmost attention as they affect dealers’ ability to advertise their products and services by phone, fax and email.

To help dealers and managers comply with these regulations, NADA is hosting a virtual seminar next month presented by Erica McMahon, chief of the FCC’s consumer policy division, and moderated by Paul Metrey, NADA’s director of regulatory affairs.

The speakers will highlight many of the well-known and lesser-known telemarketing requirements that have been imposed since the 2003 Do-Not-Call Rules took effect. The seminar will cover regulations governing telephone solicitations, commercial emails and fax advertisements, and will allow time for questions. All dealership personnel and service providers who are involved in marketing to consumers or businesses are encouraged to attend.

Changes in Telemarketing Regulations Since the National Do-Not-Call Rules Took Effect will be held Dec. 9 from 1–3 p.m. EST. The fee for this seminar is $199 per computer connection. Additional attendees can participate on the same connection for no additional cost. For more information on this virtual seminar and other upcoming seminars, visit www.nada.org/seminars or call (800) 252-6232, ext. 2.

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STAR Answers Dealers' Questions About Hardware Based Systems

Standards for Technology in Automotive Retail (STAR) has developed new guidelines to help dealers evaluate their Dealership Security. Visit STAR's Dealer Infrastructure Guidelines (DIG) publication. To learn "What is recommended for general maintenance of hardware based systems?" click here.

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Featured Video
 
 
NADA Chairman Annette Sykora at a press conference with U.S. Sen. Barbara Mikulski. Click here for the NADA-TV report.


More Video Highlights

Quotable
 
"If the customer is abandoned and actions force the dealer out of business, it's difficult to reestablish that relationship" even if the automaker eventually returns to viability.

   
-- NADA Chairman Annette Sykora explaining one reason Detroit executives appear disinclined to declare bankruptcy, The Christian-Science Monitor, Dec. 2


"They're trying to solve the problem in the auto industry on the manufacturing level, but that's not what consumers are scared about. They're scared when they see their local dealers shut down."

   
-- Raul Vasquez, an advertising consultant in Florida, who is mounting a grass-roots campaign for federal backing of "floor-plan" loans for dealers, USA TODAY, Dec. 2


"Protect your credit rating so you have good credit. Any solutions would require good credit."

    -- NADA Chairman Annette Sykora offering advice to help dealers avoid pitfalls and encouraging them not to give up during these difficult economic times, Automotive News, Dec. 1
NADA Convention 2009
 
  
Convention Workshops Keyed to Today’s Economy

Now more than ever, dealers need to meet, talk and learn how to survive in tough times. In that spirit, workshops planned for NADA’s upcoming convention in New Orleans will focus on recession-proof business operations. NADA Headlines will spotlight three convention workshops each week.

(1) Developing Strategies for Innovation and Growth

(2) “Happy Days,” “Family Feud,” or “Survivor”: Which Best Describes Your Estate and Succession?

(3) How to Convert Lost Opportunities and Increase Closing Ratios of Online Leads

Strategies speaker Jay Rao of Babson College will discuss innovation as a key to organic growth within the dealership. Participants will learn how dealers and managers can benefit from sharpening their focus on organizational innovation and the entrepreneurial mindset.

Happy Days speakers Hugh Roberts and Ricci Victorio of The Rawls Group will provide participants with practical solutions for resolving estate and succession-planning issues. Participants will examine actual case histories and learn how to avoid unnecessary tax issues and family disputes.

Online Leads speakers Peter Martin and Irish Carroll of Cactus Sky Communications, Inc. will provide insight on communicating with customers online, responding to leads and inquiries, and increasing and maximizing closing ratios. Participants will learn best practices for establishing online relationships with customers.

Join us in New Orleans at the 2009 NADA Convention and Exposition Jan. 24–27. Click here to register.

Video Highlights
 

'NBC Nightly News with Brian Williams' reports: "Demise of a local car dealership leaves a big dent."




 
Registration for the NADA convention in New Orleans Jan. 24-27 is open. Click here to see just how much progress New Orleans has made since Katrina.


NADA's New Orleans Project: Lusher Charter School
NADA's Return to New Orleans


Click here for more NADA-TV reports.

 
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NADA For more information on NADA, visit www.nada.org or contact NADA, 8400 Westpark Drive, McLean, VA 22102. This email may contain an advertisement of NADA products and services. Any opinions or statements contained herein do not necessarily reflect the views of NADA. Factual errors are the responsibility of the listed publication. If you are a franchised new-car or -truck dealer and would like to become a member of NADA, please visit the Join NADA section of www.nada.org. Questions or comments concerning NADA Headlines content may be directed to media@nada.org.